Alibaba spin-off may extend Marissa Mayer's term as Yahoo chief
28 January 2015
CEO Marissa Mayer's move to spin off Yahoo's stake in Alibaba would probably extend her life at the helm, but she would still need to act fast enough to fix the company's core business as the next challenge, CNBC reports.
After months of anticipation, Yahoo announced late yesterday that it would spin off its massive stake in China's Alibaba Group directly to shareholders in a tax-free transaction. The stake, worth around $40 per Yahoo share, accounted for the bulk of the company's valuation, and investors, including activist Starboard Value, had recently pressured the company to divest it.
Following the news, shares of Yahoo were up 7 per cent in afternoon trading at $51.42, approaching their highest level since the dotcom bubble.
According to a large number of Yahoo shareholders interviewed by CNBC yesterday, the move was the best possible outcome for the Alibaba stake. It would also likely protect Mayer as also the current Yahoo board from opposition during the upcoming proxy season.
Shareholders are allowed to nominate new directors before a deadline of 27 March.
According to one Yahoo shareholder, it they had not announced the spin, it would have been a fiasco and Mayer would have been probably fired and now Marissa and (CFO) Ken Goldman were on the clock for the next three quarters.
Meanwhile, the stock rose about 6 per cent after hours as investors digested the news, Business Insider reported.
Earnings continued to be more or less right on target with analysts' expectations, with EPS of $0.30 vs analysts' expectations of $0.29.
Revenue (minus traffic costs) of $1.18 billion, came in somewhat lower than analysts' expectations of $1.19 billion.
Top line growth was important with revenue basically declining since 2009. The fourth quarter usually Yahoo's biggest, declined slightly from last year.